The Indicator from Planet Money - Why the US is losing the drone war

Episode Date: July 6, 2026

The US defense industry is struggling to keep up with the revolution in cheap drones vs. expensive reusable military equipment. Today on the show, we talk with Stacie Pettyjohn, the director of the Defense Program at the Center for a New American Security on the three big reasons the U.S. is falling behind.Fact checking by Sierra Juarez.Your Next Listen — How Iran is wasting American resourcesConnect with The Indicator — Sign up for The Indicator’s brand new newsletter— Buy the Planet Money book— Find our socials, YouTube and more!— For sponsor-free episodes, subscribe to NPR+ See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

NPR. This is the indicator from Planet Money. I'm Adrienne Ma. And I'm Patty Hirsch. Over the course of history, key advances in technology have made fundamental changes in the way human beings wage war. The longbow, gunpowder, the airplane, the tank, the nuke. And now, the drone. Drones that can fly in swarms over hundreds of miles.

Sea drones that can attack targets underwater or on the surface. And land drones that can move across terrain and hold positions for days, as long as they have ammunition. Now, drones were around before the wars in Ukraine and Iran, but those conflicts have driven the proliferation of drone technology and made a fundamental change in the way we fight. Drones are now embedded in warfare. We've reported earlier this year that combating small, cheap drones used by Iran

has drained the U.S. military arsenal of expensive high-tech weapons systems. So you'd think the U.S., being the world's biggest armsmaker and exporter, would be right on top of this, right? Yeah, you would. You'd think our defense. business would be dominating the development and production of drones and the weapons we need to fight them, but they're not. And there are a lot of reasons for this. On today's show, we're going to focus on just three. That's coming up after the break. When it comes to making and selling weapons, the United States is the undisputed heavyweight champion of the world.

It accounts for roughly 42% of global arms exports, and that includes drones, by the way. Stacey Petty John is director of the Defence Programme at the Centre for a New American. and security. She says the U.S. was well ahead of the curve when it came to getting into the drone business. The U.S. is the leader in advanced expensive drones, and that's what the U.S. military acquired a lot of for the global war on terrorism, the wars in Iraq and Afghanistan. But these are 30 million or, like, very expensive drones compared to what we're talking about, that Iran, Russia, or Ukraine is building and using... And this is how the American military rolls, or has rolled at least since the 1980s.

The Department of Defense, or war, if you prefer, has expensive tastes. The U.S. military tends to prefer things that are quite high-end, reusable, not like something that maybe you use it a couple times, maybe you only get one use out of it. Even our missiles that are single-use are expensive and high-end. And this is the first reason it's become difficult for the American military and the defense industry to pivot to this new paradigm of warfare. There is what Stacey calls an institutional bias against cheap stuff. And it's why we had $4 million cruise missiles shooting down $4,000 drones off the coast of Iran.

The U.S.'s military edge has been built on this qualitative superiority that you have the better technology, not the cheaper thing. Now, the military isn't stupid. It's wise to the asymmetry that drones, whether on land or sea or in the air, bring to a conflict. And the top brass is working to acquire better, cheaper weapons to combat these systems. The difficulty lies with integrating that cheap stuff with the expensive gear that we already have. Figuring out how to integrate them when you have this much more sophisticated military that includes large battleships, you know, carrier strike groups, submarines, tactical aircraft, stealthy bombers,

where does a tiny commercially derived drone fit in, and how do you make these different pieces work together? The second big reason the U.S. defense industry is struggling to keep up with the cheap and nasty drone revolution is the procurement process. That is the way the government orders its weapons. Our acquisition processes and our budgeting processes have been built and are tailored for these exquisite reusable systems.

Budgeting takes years, Stacey says. The Government Accountability Office find that it can take more than a decade for big weapons programs to actually start operating on the ground. Companies with defense contracts call this the Valley of Death because they have to hang a bite waiting for years, without pay, by the way, for the Pentagon to complete its reviews. Now, once again, the military powers that be are aware that this is a problem. Last year, the DOD announced an overhaul of its procurement process, designed to speed things up. They're putting a lot of money out and trying to quickly issue contracts and have competition

among small drone companies and field them. And that is intended to provide a more stable and a longer-term demand signal so that U.S. companies can start to break into the market. The U.S. defense industry regards this as a welcome policy of the Trump administration. It could help U.S. companies develop and build the new cheaper weapons, the military needs to fight this new kind of war. Unfortunately, however, there's another administration mandate that's getting in the way of changing the procurement process.

You could call this reason two, part B. The U.S. military only wants to use systems that do not incorporate Chinese components or are Chinese built. And that's a real problem because Chinese companies dominate the commercial drone market. And Stacey's not just talking about finished drones here. She's talking about a lot of stuff that goes into drones. There are materials, things like rare earths that China dominates the market, different sub-components that are really important to drones, like brushless motors,

batteries, some of the sensors. You can get these parts from other countries, but they tend to be more expensive and they're just not as good. So you end up buying more expensive inputs and you then end up undermining one of the main propositions of Jones, which is that they're cheap because they're no longer cheap. You're buying a $30,000 quadcopter that doesn't perform as well as a DGI MAVIC 3, which is, you know, a couple thousand bars. You'd think that there would be some sort of communication between these different parts of the Pentagon. This is government as usual, Adrian. But, you know, all jesting aside, you might be thinking to yourself, well, where is the government's sense of urgency when it comes to this issue?

I mean, after all, we just spent as much as $113 billion striking Iran and fending off its drones. We've seriously depleted our stocks of interceptors and strike missiles. It's clear to everyone that drones have changed the nature of warfare. And yet, while the Ukrainians are frantically innovating and adapting and churning out as many as a thousand drones a day, the U.S. is still lagging behind. And this is the third big reason we're not seeing this immediate pivot by the U.S. defense industry to making smaller, cheaper weapons like drones. The U.S. is not in a shooting war. And there just isn't the same pressing need in Washington as there is in Kyiv. The urgency of the situation in Ukraine is driving them to be very innovative, to take a lot of risk,

and to do pretty amazing things. It's not to diminish what they're doing at all, but we don't have any of that here. The Pentagon is in a difficult position, Stacey says. It wants to keep pace with developments, but the technology is changing too fast to keep No matter what, the peacetime demand just from the U.S. military is going to be much smaller than what you see in terms of Russia or Ukraine at war needing four million drones a year. You don't want to buy four million of these drones that are obsolete within a year. And that's being really generous since adaptation cycles on the front lines are much more, much faster than that. That mismatch in pace and demand makes it nearly impossible to place orders with small defense contractors that are developing these weapon systems. And it's just as hard for those contractors to bid. I mean, who knows what the defense landscape will look like in a year.

Yeah. And meanwhile, Stacey says the big defense companies like Lockheed Martin and Northrop Grumman, they're still focused on where the real money is. While there's a lot of money right now in drones, if you're talking about a fraction of $150 million, you know, you have airplanes that cost more than $150 million for one. Just talking about fast jets like the F-16 that can cost $100,000. and 50 million, and the F-35, that's about 100 million a pop.

And can you guess how many fast jets Lockheed Martin delivered last year? More than 200. Okay, well, I guess we know where the money is. Yes, we do. This episode was produced by Cooper Katz McKim and Angel Carreras. It was engineered by Travis Hagan. It was fact-checked by Sierra Juarez, cake and cannon is our editor and the indicators of production of NPR.